Moscow: Freight rates for Russian oil shipments from the Baltic ports to India eased further in the period from late May to early June, thanks to high tanker availability, but the trend may reverse if Europe’s proposed lower price cap comes to fruition.
The European Union has put forward a new sanction package against Russia over Ukraine and proposed to lower the Group of Seven nations’ price cap on Russian crude oil to $45 a barrel from $60 a barrel.
The G7 countries and the EU, imposed the $60 cap on Russian oil in late 2022, restricting access to Western shipping and insurance services for above-cap purchases in a bid to curb Moscow’s revenues.
However, as the price of Russia’s flagship Urals crude has fallen below the cap, Western shipowners have been able to return to its oil market.
Urals crude price estimates in Russia’s ports have stabilised below $60 per barrel since early April, allowing more Western shipping companies, primarily Greek, to resume shipping services, increasing tanker availability and putting freight rates under pressure.
By Wednesday, the cost of Urals oil loaded from the Baltic Sea port of Primorsk was about $54.72 per barrel.
The cost of shipping Urals oil from the Baltic ports, including Ust-Luga, to India fell to between $5.5 million and $5.7 million from about $6 million per one-way shipment on average in April and May, and about $8 million early in March.
Russian crude shipping rates rose sharply after a new round of U.S. sanctions on Russian energy interests unveiled in January took effect. Russian oil sellers were forced to look for new tankers to replace those hit by sanctions.
Freight rates still remain above levels in January, when the cost of shipping Russian crude from the Baltic ports to India was between $4.7 million and $4.9 million per one-way shipment.
